At least three people believed to have been seeking asylum in Australia were killed today in an explosion on a boat that was being escorted to a detention centre by a navy vessel.

Two more people were missing and a number of others suffered burns in the blast on the boat that was on its way to Christmas Island, the remote Indian Ocean territory where the Australian government processes refugee applications.

The vessel was intercepted yesterday by the navy in the Timor Sea, about 500 miles off Australia's northern coast.

The premier of Western Australia, Colin Barnett, claimed the asylum seekers deliberately drenched the boat in petrol.

However, Bob Debus, the country's home affairs minister, refused to say whether that was the case. Debus said: "It is clearly a possibility that that is what occurred but we are not in the position to finally confirm whether that is so or not."

Western Australian police speculated that the explosion may have originated in the engine compartment. The small boat was carrying 49 suspected asylum seekers from Afghanistan and a crew at the time of the blast, which sank the vessel. It was also carrying several Australian military personal overseeing the escort process. Two Australian nationals were slightly injured.

It was the third boat carrying suspected refugees intercepted by Australia's navy in the past two weeks, and the sixth this year. The frequency of such discoveries has led to debate over whether last year's easing of strict immigration regulations has encouraged people smugglers and would-be refugees. Most of the recent asylum seekers have come from Afghanistan, Iran and Iraq.

The number of boats gradually decreased after the previous Australian government imposed unlimited detention for illegal immigrants and made it difficult to get refugee visas. But since the present government relaxed policies last July, 13 boats carrying more than 400 people have entered Australian waters.